PropTech — drivers, trends and engagement

Whether it’s by automating, personalising, or streamlining processes, technology can remove friction and workload from real estate professionals when it comes to keeping clients and customers informed and delivering a customer-centric experience. While the skills of the profession in building meaningful connections, market knowledge and problem-solving will remain critical, we look at how property technology (PropTech) is changing the rules of engagement.

Property owner analytics, building efficiency data, marketing and management — PropTech is used across the real estate spectrum. We’re starting to see a dynamic digital ecosystem begin to foster new and more efficient consumption models at all stages of the property cycle — from pre-sales, sales, financing, construction and settlement to management.

A digital gear change

So, what’s driving the quick shift to digital technologies in the property sector? Accelerated by the pandemic, we’ve seen a shift in consumer expectations — and technology is bridging that gap across all industry segments. As Chris Simmons, Chief Executive Officer at Listing Logic, an automated digital advertising platform, observes, over the last 20 years the world has gone digital, adding that “the real estate market is now catching up on what has been a global shift”.

“As the millennial generation comes through as the dominant purchaser of properties, these digital natives expect to find all information online and available when they want it,” Simmons adds.

Early digital adopters such as financial services, health services, hospitality, food delivery, retail and travel have all experienced digital disruption. All you need to do is look at FinTechs (financial technology) such as Revolut, which have upended banking services so they are mobile, connected, and answer the needs of a digital-first customer base.

Howard John, New Zealand sales manager at DIAKRIT — a leading provider of digital visualisation solutions — echoes this sentiment. When it comes to property marketing and transactions, he says it’s down to buyer and vendor expectations — a trend driven through innovations in other industries.

“We have all come to expect information at our fingertips, at any time of day, wherever we are in the world. Major industry players like Uber, Netflix and Spotify have led this evolution and today a customer's experience isn't industry-specific. Rather, real estate is competing with the best experiences a buyer or vendor has received across any industry, and this is driven by digital technologies enabling a greater customer experience,” he says.

An opportunity for real estate excellence

As innovations already seen in other industries continue to root in the real estate sector, we can expect to see PropTech further streamline operations and reduce cost, by enhancing transparency, boosting security, and automating repetitive processes.

The early stages of this were the adoption of digital record keeping through customer relationship management systems (CRMs), which enable agencies to track properties and manage their customers, Simmons notes.

Knight Hou, CEO and co-founder of property market data provider Relab, looks to the rapidly burgeoning areas of FinTech, and more recently, blockchain technology, which paves the way for increased efficiencies, reduced friction, minimalization of lead times and increased profits.

“Decentralised systems encourage collaboration and seamless transactions. We are already seeing this emerge in the digitisation process,” he adds.

The introduction of blockchain technology to real estate has the potential to really disrupt how business is done. By leveraging distributed ledger technology (DLT), blockchain can provide greater transparency and increase trust — which is the currency of real estate. But it also has the potential to expedite contract processes, save time and reduce cost.

In the current market, where people are increasingly looking for alternative options to get on the property ladder, blockchain allows what is termed ‘tokenisation’. This enables multiple people to purchase tokens of a particular property and co-own the building — introducing a clean way of partial-ownership of that asset.

Accelerating engagement from pre-sales to operations

We’ve already seen the proliferation of property marketplaces — such as realestate.co.nz — that connect buyers and sellers, tenants and landlords, and other real estate stakeholders. This is now a well-embedded part of the property process that is closely aligned with digital marketing tactics.

Digital promotion or engagement represents a major opportunity for PropTech. John believes that it’s the space that will continue to see the most growth.

“If agents can master high levels of engagement on their listing page with digital tools like virtual tours, furnishing and renovation tools, they can then use that buyer information to retarget and grow their database. This will allow for more access to more buyers and a bigger pipeline for future listings. Think along the lines of how Facebook and other social media apps feed us content based on our preferences and history,” John says.

But how one leverages this effectively is down to data.

“Aggregating property information into digital promotions and building well-qualified buyer pools using artificial intelligence is not far away,” Simmons says. What this means in practice is more targeted and thus effective prospecting and marketing campaigns, so you reach your potential vendors and buyers where they are in a way that resonates.

The data element doesn’t just pertain to prospecting and marketing, there is much room for growth in the areas of data analytics and integration. Hou recognises that the real estate profession is using technology at an advanced level on the demand-side, but he sees a massive opportunity for the effective use of data to improve operational efficiencies.

“The PropTech lifecycle encompasses developing, building, renting, buying, managing and selling,” he says, and technology can support more effective practices throughout.

“For instance, removing the friction of data flow between each step of the lifecycle would help reduce costs/time wasted, improve efficiencies and optimise customer outcomes,” Hou advises.

2022 — a year of digital transformation

The pace of digital transformation in the real estate sector shows no signs of slowing. The number of tech startups entering the PropTech arena and investment levels in this space are tell-tale signs of innovations to come. But what might we expect on the PropTech scene over 2022? Well, the future looks truly connected, with engagement as the integral focus.

On the customer-facing side, we will continue to see the use of digital tools to support engagement between vendor-agent-buyer and buyer-property.

We’ve already seen how readily people have adapted to virtual technologies during the pandemic, with buyers purchasing sight unseen.

“The increase in the use of virtual tours and property videos to act as ‘pre-inspections’ before coming to physically view the property will move from a COVID-19 requirement to the norm,” John says.

As consumers become ever-more familiar with them and the technology evolves, we can expect confidence in — and acceptance of — virtual methods of conducting business to grow. “The way the world is moving towards AI, Metaverse and other digital advancements, those who do not keep up with consumer demand will fall behind and their business will suffer,” he cautions.

Simmons envisions direct digital engagement at all stages of the property lifecycle. “Automated advertising solutions to serve dynamic, hyper targeted audiences with real-time statistics.” But he also sees what has become known as ‘big data’ infiltrate the space further. “Big data will play an important part in real estate in the future allowing the software to recommend more intelligent and personal searches,” he adds.

Hou ventures a step further — heralding the advent of a more connected data pool, through which the real estate sector can achieve a greater level of transparency.

“Similar to “Open banking” in FinTech, the liberation of property related data is set to be an emerging trend. We’re also seeing proactivity from central and local authorities in terms of digitalisation. Tangible benefits include increased collaboration between subcontractors, improved transparency to help with decision-making, time and efficiency gains and increased participation of end users (home buyers) in the planning, design, and building process,” he says.

Already, we have seen a radical transformation in how we sell, buy, and rent properties through the adoption of digital technologies. As the market grows, we will continue to see the introduction of digital tools that enable the real estate profession to connect with prospects and streamline some of the more tedious processes.

PropTech won’t replace this thriving profession, but it does have the ability to enhance and support it.

THE WAY THE WORLD IS MOVING TOWARDS AI, METAVERSE AND OTHER DIGITAL ADVANCEMENTS, THOSE WHO DO NOT KEEP UP WITH CONSUMER DEMAND WILL FALL BEHIND AND THEIR BUSINESS WILL SUFFER.